Press Release

VIS Reaffirms Entity Ratings of Pakistan Cables Limited

Karachi, November 20, 2024: VIS Credit Rating Company Ltd. (VIS) has reaffirmed entity ratings of Pakistan Cables Limited (‘PCAL’ or ‘the Company’) at ‘A/A1’ (Single A/A One). The medium to long term rating of ‘A’ signifies good credit quality; Protection factors are adequate. Risk factors may vary with possible changes in the economy. Short term rating of ‘A1’ denotes strong likelihood of timely repayment of short-term obligations with excellent liquidity factors. Outlook on the assigned rating is ‘Negative’. Previous ratings action was announced on August 01, 2023.

The assigned ratings reflect strong sponsor profile, well-established brand image, and its leading position in Pakistan's wire and cable industry. However, business risk remains elevated due to rising input costs, subdued economic environment, and increasing competition from the unorganized segment.

The Company achieved higher turnover in FY24, primarily driven by price and volumetric growth. However, gross margin was constrained by a sharp rise in production costs, mainly due to increased raw material and energy prices. This contraction in gross margin, along with higher operating expenses and a notable rise in financial charges, led to decline in net profitability in FY24, culminating in a net loss for 1QFY25. The Company has made significant capital investments in a new production facility, which has now commenced partial operations. However, the ongoing expansion has elevated PCAL's financial risk, with higher gearing and leverage ratios. Liquidity remained stable, supported by a steady current ratio and an improved cash conversion cycle. Management anticipates that increased production levels will help improve margins going forward.

Ratings remain sensitive to improvement in margins and debt coverages as well as deleveraging of balance sheet.

For further information on this ratings announcement, please contact at 021-35311861-64 or email at info@vis.com.pk.



Applicable Rating Criteria: Corporates:
https://docs.vis.com.pk/docs/CorporateMethodology.pdf

VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf

Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited (VIS) does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.VIS , the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report.VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright 2024 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .